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Netflix Changes

Dear XXXXX,

I messed up. I owe you an explanation.

It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes. That was certainly not our intent, and I offer my sincere apology. Let me explain what we are doing.

For the past five years, my greatest fear at Netflix has been that we wouldn't make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us). So we moved quickly into streaming, but I should have personally given you a full explanation of why we are splitting the services and thereby increasing prices. It wouldn’t have changed the price increase, but it would have been the right thing to do.

So here is what we are doing and why.

Many members love our DVD service, as I do, because nearly every movie ever made is published on DVD. DVD is a great option for those who want the huge and comprehensive selection of movies.

I also love our streaming service because it is integrated into my TV, and I can watch anytime I want. The benefits of our streaming service are really quite different from the benefits of DVD by mail. We need to focus on rapid improvement as streaming technology and the market evolves, without maintaining compatibility with our DVD by mail service.

So we realized that streaming and DVD by mail are really becoming two different businesses, with very different cost structures, that need to be marketed differently, and we need to let each grow and operate independently.

It’s hard to write this after over 10 years of mailing DVDs with pride, but we think it is necessary: In a few weeks, we will rename our DVD by mail service to “Qwikster”. We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming.

Qwikster will be the same website and DVD service that everyone is used to. It is just a new name, and DVD members will go to qwikster.com to access their DVD queues and choose movies. One improvement we will make at launch is to add a video games upgrade option, similar to our upgrade option for Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games. Members have been asking for video games for many years, but now that DVD by mail has its own team, we are finally getting it done. Other improvements will follow. A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated.

There are no pricing changes (we’re done with that!). If you subscribe to both services you will have two entries on your credit card statement, one for Qwikster and one for Netflix. The total will be the same as your current charges. We will let you know in a few weeks when the Qwikster.com website is up and ready.

For me the Netflix red envelope has always been a source of joy. The new envelope is still that lovely red, but now it will have a Qwikster logo. I know that logo will grow on me over time, but still, it is hard. I imagine it will be similar for many of you.

I want to acknowledge and thank you for sticking with us, and to apologize again to those members, both current and former, who felt we treated them thoughtlessly.

Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions.

Respectfully yours,

-Reed Hastings, Co-Founder and CEO, Netflix

p.s. I have a slightly longer explanation along with a video posted on our blog, where you can also post comments.

This message was mailed to xxxxxx by Netflix.
SRC: 1578.0.US.en-US
Use of the Netflix service and website constitutes acceptance of our Terms of Use and Privacy Policy.
(c) 2011 Netflix, Inc. 100 Winchester Circle, Los Gatos, CA 95032, U.S.A.

Re: Netflix Changes

The movie companies are demanding much more money from Netflix and they are trying to pass this along at double the cost. Heard that it may go up even more after that.

That said, Sony and others are keeping some of their prime content away from netflix for awhile. Redbox get big DVDs it sooner. I just kept streaming and am using Redbox and Vudu, Amazon etc. Just playing the field like guys do.

I feel like the movie compamnies are going the way of music companies - they are paying too much money out for promotion and then they have to scrape in a big payback on the tailend.

Re: Netflix Changes

Hmm, so now I get to manage my disc queue and options through one service on one website, and I get to manage all my streaming stuff through another website under a different name. Yet the cost to me and the service delivered will remain the same. What a pain in the ***. I guess the next lesson for Netflix is that two wrongs don't make a right.

This seems to add unnecessary complexity to the business model and it seems like there are plenty of opportunities to negatively impact customer experience. This just doesn't seem like a wise move at all for a company that is reeling from some recent business decisions that have already driven a lot of negative PR.

Re: Netflix Changes

Originally Posted by aeroclone

Hmm, so now I get to manage my disc queue and options through one service on one website, and I get to manage all my streaming stuff through another website under a different name. Yet the cost to me and the service delivered will remain the same. What a pain in the ***. I guess the next lesson for Netflix is that two wrongs don't make a right.

I voluntarily signed up for the "separate website/company" idea on Friday by dropping Netflix discs and picking up Blockbuster. Well, technically, my Netflix discs won't end until 10/13/11 and I am on the 30 day trial for Blockbuster. But the cost is $5 cheaper for the 2 disc feature (plus the added Netflix BR cost, so $9 I believe) in addition to the savings if I wanted to rent games when Netflix begins to charge for that option as well. Along with the price savings, the ability to take a movie in to a brick & mortar store and get a different movie immediately sounds great.

I'll be keeping Netflix streaming and am adding BB for the discs only. I am not sure what I'll do when the BB streaming hits, that will be a decision for another day when I can see how good it is. But if you're frustrated with NF and the prices, maybe give BB a try I suppose. They're pushing hard to steal customers away, which means the prices and incentives should stay the same for a while..

Re: Netflix Changes

Originally Posted by PerkyForHerky

I voluntarily signed up for the "separate website/company" idea on Friday by dropping Netflix discs and picking up Blockbuster. Well, technically, my Netflix discs won't end until 10/13/11 and I am on the 30 day trial for Blockbuster. But the cost is $5 cheaper for the 2 disc feature (plus the added Netflix BR cost, so $9 I believe) in addition to the savings if I wanted to rent games when Netflix begins to charge for that option as well. Along with the price savings, the ability to take a movie in to a brick & mortar store and get a different movie immediately sounds great.

I'll be keeping Netflix streaming and am adding BB for the discs only. I am not sure what I'll do when the BB streaming hits, that will be a decision for another day when I can see how good it is. But if you're frustrated with NF and the prices, maybe give BB a try I suppose. They're pushing hard to steal customers away, which means the prices and incentives should stay the same for a while..

My beef isn't with the price at all, I just don't want to deal with two separate sites to manage my stuff. Right now, I get one stop shopping for my discs and my streaming, but that is gone. Obviously, moving to BB doesn't fix that, though now that I have to manage two anyway, the switching cost is gone for adding a BB disc plan in the place of Netflix discs, as you have already experienced.

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